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GEs Two-DecadeTransformation: Jack Welchs

LeadershipAmanda RodriguezAmanda Rodriguez

Patricia RobledoPatricia Robledo

Brittany CulbersonBrittany Culberson

Yue JiangYue Jiang

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Leader or Manager? 1. TRUE or FALSE: I think more about immediate results than I do about mentoring others.

2. TRUE or FALSE: People will be motivated if you pay them enough.

3. TRUE or FALSE: Its nice to know about peoples long-term goals, but not necessary to get the jobdone.

4. TRUE or FALSE: If you have a consistent recognition system that rewards everyone in the same

way, then that is enough. 5. TRUE or FALSE: The best way to build a team is to set a group goal that is highly challenging,

maybe even crazy. 6. TRUE or FALSE: My greatest pleasure in my job comes from making the work process more

effective. 7. TRUE or FALSE: I spend more of my time and attention on my weaker performers than I do on my

top performers, who basically take care of themselves. 8. TRUE or FALSE: Its better not to know anything about the personal lives and interests of the

people who report to me. 9. TRUE or FALSE: Sometimes, its almost as ifIm a collector of people because Im always

recruiting and getting to know new people. 10. TRUE or FALSE: I like to surround myself with people who are better at what they do than I am.

11. TRUE or FALSE: I am a lifelong student of what makes other people tick.

12. TRUE or FALSE: People talk about mission too much its best just to let people do their workand not try to bring values into the conversation.

13. TRUE or FALSE: Its my job to know everything that goes on in my area.

14. TRUE or FALSE: I pay close attention to how and where I spend my time, because the priorities Iput into action are the ones that other people will observe and follow.

15

. TRUE or FALSE: I

ve worked hard to get along with or understand people who are very differentfrom me.

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What it takes to be a Leader

Drive

Leadership motivation

Integrity

Self-Confidence

Knowledge of the business

Ability to perceive the needs and goals of othersand to adjust ones personal leadershipapproach accordingly

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Leaders & Managers

Challenge the process Dont rock the boat

Key Behaviors

Inspire a sharedvision

Enable others act

Model the way

Encourage the heart

Deal with ongoing day-to-day

Monitoring activities

Planning andbudgeting routines

Short-term profits

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Followers Capable of independent thinking

Are actively committed to organizational

goals instead of their own interests Willingness to tell the truth

Hold performance standards higher thanrequired

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Leaders, Managers, Followers An individual can exemplify both processes

(leadership, management), one or the other orneither

It is vital for a company to have both, leadersand effective managers

How well followers follow is also key for success

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Innovation=Imagination

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Six businesses, each with a number

of business units aligned for growth

Commercial

Finance

Healthcare

Infrastructure

NBC Universal

Consumer Finance

Industrial

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GE Global Research:

First Industrial Lab in the U.S.

Began in Schenectady,New York in 1900

Founded with the focus toimprove businesses throughtechnology

One of the worlds most diverseindustries

Cornerstone of GEs commitmentto technology

1900

2006

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A History ofInnovation1909 Ductile Tungsten

1913 Medical X-Ray

1932 Langmuir Nobel Prize in Chemistry

1942 First US Jet Engine

1952 LEXANTM Polycarbonate

1955 Man-Made Diamonds

1973 Giaever Nobel Prize in Physics

1983 Magnetic Resonance Imaging

1995 GE90, The Worlds Most Powerful

Jet Engine

1999 Digital X-Ray

2003 H Turbine

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Innovation-Key of GE culture At GE, we consider our culture

to be among our innovations.Over decades our leaders have

built GE

s culture into what it istoday a place for creating andbringing big ideas to life. Today,that culture is the unifying forcefor our many business unitsaround the world-GE

How important isinnovation for leadership?If leaders dont haveinnovation, what happensto the company?

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GE a Bellwether of American

Management Practices

1930s, highly centralized, tightlycontrolled corporate form

1950s, decentralization

1960s, strengthen its corporate staffand develop sophisticated planningsystems

1970s, SBU-based structure andsophisticated planning processes

1980s-2001, three waves in Welchsperiod

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Strategy-SBU based structure and planningprocesses

10 groups, 46 divisions, 190 departments, and 43 strategic

business units Develop a constructive business-government dialogue

Wall Street Journal proclaimed him as a management legend

Success Sales more than doubled ($10 billion to $22 billion) and earnings

grew even faster ($572 million to $1.4 billion)

A major thrust into international markets

Expansion of world trade and restoration of U.S.competitiveness

Reg Jones -1970s

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Questions Shareholders: What are your concerns

regarding the new leadership and the financial

success of GE? Employees: What are your concerns

regarding the culture, benefits, work

environment under a new leader?

Potential CEO: What challenges do you seecoming into a successful corporation?

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Who is Jack Welch? 1935: born in Salem,

Massachusetts

1957: BS in Chemical Engineering

1960: MS and PhD in ChemicalEngineering

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Jack Welch and GE

1960: Joined GE as a chemical

engineer 1972: Elected GEs youngest VP

1979: Vice Chairman

April 1, 1981: Became the 8th

Chairman and CEO of GeneralElectric

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Taking Over GE Challenges from outside of GE

Economic recession High interest rates Highest unemployment rate since the

depression

Challenges from GEMassive information and inefficient macro-

business

What is Welchs reaction to theseChallenges?

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Welchs Vision

A decade from now, I wouldlike General Electric to be

perceived as a Unique, high-spirited, Entrepreneurialenterprisethe mostprofitable, highly diversifiedcompany on the earth, with

world quality leadership inevery one of its productlines. -- Jack Welch

Three-Circle Vision for GE

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Restructuring the Hard Drive Challenged everyone to be better than the best

Sold more than 200 businesses and made over370 acquisitions

Insisted GE become more lean and agileresulting Delayering: elimination of the sector level

Downsizing: elimination of about 123,450 jobs

Divestiture: elimination of an additional 122,700 jobs

Replaced 12 of his 14 business heads

Willingness to change is a strength, even if it means plunging part of thecompany into total confusion for a while. ~ Jack Welch

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Initiatives - Objective Work-Out

Best Practices

Going Global Boundaryless Behavior

Six Sigma

E-Business

We bring together the best ideas turning the meetings of our topmanagers into intellectual orgies. ~ Jack Welch

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Did it work? Revenue

Culture?

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Jack Welch 1999: Named Manager of

the Century by Fortune

named one of the three mostadmired business leaders inthe world by Financial Times

September 7, 2001: Retiredas CEO

Published autobiography,Jack, Straight from the Gut

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Leadership Styles Autocratic

Makes decisions alone

Yields higher performance

Democratic Solicits input from group for decisions

Yields positive attitude

Laissez Fair Absence of managerial decision making

Yields negative attitudes

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Type ofPower Authority

Legitimate Power Was CEO: Position to tell others what to do

Reward Power Control over Rewards:

Performance reviews, pay increases, bonus

Coercive Power Control over punishment

Implementation of policies and administration of disciplinaryaction

Expert Power Has expertise or knowledge over the business

Had been with the company for 20 years when he became CEO

-foxnews.com

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Followership Success depends on how

well followers follow

Not just Jacks Company

GEs 100-year-plus track record is simply about having the very

best people at every single position. That is its number one corecompetency. No one has better people. When you get the bestpeople, you dont have to worry about execution, because theymake it happen.

-Larry Johnston, CEO of AlbertsonsFormer CEO of GE Appliances (1991-2001)

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Passing the Torch Retirement September 2001

Lengthy process of succession Internal candidates only

Never named candidates

No strategic vision

No common measure for candidates

Long list of candidates

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The New Guy JeffImmelt

GE Corporate Marketing - 1982

Plastics, Appliance, Medical President & CEO, GE Capital

Board - 2000

GE hit a home run with Welch and wanted to try again.

More profoundly, [Immelt] demonstrated a superiorcapacity to grow, which was the most important criterionin the choiceThey just knew he would have to rethinkand reinvent GE

-Geoffrey Colvin (Fortune)

-ge.com

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The End of an Era Reg Jones era (1981)

Built up immense financial strength

Saw profits and growth

Jack Welch era (1981-2001)

Superior leadership Profitable and immense growth

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GE Now Operates in 100+ countries worldwide

300,000+ employees worldwide

2006 revenue - $163.4 billion

2006 earnings - $20.8 billion

One of original six companies still

listed on Dow Jones index

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Leadership Continues

At the top, we dont run GE like abig company. We run it like a bigpartnership, where every leadercan make a contribution not justto their job, but to the entire

Company.

-JeffImmelt, CEO

Letter to Investors

2005 Annual Report

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http://www.schulersolutions.com/leadership_self_test_answers.html

http://money.cnn.com/magazines/fortune/fortune_archive/1989/03/27/7183/index.htm

http://www.ge.com

http://money.cnn.com/magazines/fortune/fortune_archive/2001/01/08/294478/index.htm

http://www.cnnmoney.com

http://www.nni.nikkei.co.jp/FR/TNKS/TNKSHM/welch/index.html

Abetti, P,(2006), Creativity and innovation Managerment, Case study: Jack Welvhs Creative revolutionary

Tranformation of General Electric and Thermidorea Reaction (1981-2004), V15 no.1, p74.

Bibliography